Drivers Can Expect a Break On Summer Gas Prices

By Ángel González

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HOUSTON—U.S. drivers may finally reap the benefits of the North American oil boom this summer—albeit only a little.

The U.S. Energy Information Administration forecast this past week that prices for regular gasoline will average $3.63 a gallon this summer, a six-cent drop from the summer of 2012. The projected level is higher than today’s cost, but prices typically rise during the summer, the peak driving season.

The expected drop this summer compared with last year is due in part to lower demand, as cars become more efficient. But it also reflects a continuing moderation in the global cost of crude, a trend driven by growth in oil production from hydraulic fracturing of shale deposits in the U.S., analysts say.

Next year, analysts with Raymond James predict that Brent crude from the North Sea, a global benchmark for crude prices that typically mirrors U.S. fuel prices, will drop to $85 a barrel, about $20 lower than it recently has traded. That could translate to a 50 cent-per-gallon break at the pump. Other analysts also predict a moderation in crude-oil prices, and the growth in U.S. oil supply amid tepid demand is “really starting to get the market’s attention,” said Richard Hastings, an analyst with Global Hunter Securities LLC.

On Friday, Brent settled at a nine-month low of $103.11 a barrel on concerns about over-supply, a $1.16 drop.

For now, however, the relief is slight, with fuel prices still not far from their record levels. The national average for a gallon of regular gasoline on Friday stood at $3.56, down seven cents from the previous week, and 35 cents below the price a year ago, according to AAA.

“Motorists are beginning to see some benefits arising from increased domestic oil production, but gas prices remain historically very high. Most motorists would say that prices have not fallen nearly as fast as necessary to reduce pain at the pump,” said Michael Green, a spokesman for the group, formerly known as the American Automobile Association.

Comments (1 of 1)

There's still no reason why gasoline costs as much as it does. We've got oil bubbling up out of the ground where I live in Oklahoma. The problem is that we don't have enough refineries. If we had more refineries America would be exporting gasoline and oil products on a massive scale to China and other countries, and our own gasoline would cost around $2/gal.